The General Office of the State Council released a circular on May 31, outlining the reform to clarify fiscal powers and expenditure responsibilities between central and local governments in developing science and technology.

In promoting scientific and technological innovation, roles for government and market’s participation should be made clear, with the market playing a decisive role and the government supporting projects in which the market cannot work effectively, according to the circular.

It also asked to work out an overall plan for current and long-term reform items.

Fiscal powers and expenditure responsibilities of central and local governments were spelled out in the following fields: encouraging sci-tech R&D, building innovation bases, training and cultivating talent, transferring and transforming sci-tech outcomes, establishing regional innovation systems, popularizing related knowledge and reforming scientific institutions, the circular said.

Basic research that explores scientific unknowns should be supported by the central government, and research targeting economic development should be funded by both central and local governments, according to the circular.

Central and local governments should also support transfer and transformation of sci-tech outcomes by providing risk compensation and post-program subsidies, and channeling venture capital.